Structuring Covenants in Leveraged Loans and High-Yield Bonds for Borrowers and Lenders

Additional Debt Covenants, Equity Cures, Builder Baskets, Restricted Subsidiaries, Events of Default and More

A live 90-minute CLE webinar with interactive Q&A


Tuesday, November 20, 2018 (in 3 days)

1:00pm-2:30pm EST, 10:00am-11:30am PST

or call 1-800-926-7926
Program Materials

This CLE webinar will examine current market terms and conditions for leverage loans and high-yield bonds, and characteristics common to each type of financing. The panel will discuss various covenants, including additional debt provisions, equity cures, builder baskets, and other key terms and conditions from both borrower and lender perspectives.

Description

Due in part to low interest rates, reduction in defaults and investor demand for higher yield bonds, the market has seen tremendous growth in the issuance of covenant-lite leveraged loans as well as high yield bonds with similar covenants.

Prevailing trends are the issuance of loans and bonds that do not contain maintenance covenants. Alternatively, documentation may include springing maintenance covenants, performance cushions and equity cures. Often borrowers are allowed to incur additional debt, make acquisitions and repay subordinated debt. Covenant-lite loans may include “builder baskets” to fund these other transactions.

As with high-yield indentures, the parties may determine that some subsidiaries are “unrestricted” and not bound by the leveraged loan covenants. The deal may also include one or more subsidiary guarantors. Counsel should understand the ramifications of each for the borrower and the loan.

Listen as our authoritative panel examines and compares terms and conditions contained in leverage loans and high-yield bonds. The panel will review current covenants from both borrower and lender perspectives.

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Outline

  1. Current leveraged loan covenants
    1. Equity cures
    2. Additional debt occurrence
    3. Acquisitions
    4. Repayment of subordinated debt
  2. Similarities of leveraged loan terms with high-yield bonds
    1. Restricted subsidiaries
    2. Builder baskets
    3. Events of default
  3. Opportunities and risks for borrowers and lenders

Benefits

The panel will review these and other key issues:

  • What are the market forces impacting covenants in leveraged loans and high-yield bonds?
  • What are typical features of covenant lite loans?
  • What are typical features of high-yield lite covenant packages?

Faculty

O’Sullivan, Maura
Maura E. O'Sullivan

Partner
Shearman & Sterling

Ms. O’Sullivan has extensive experience in representing financial advisors, lenders and borrowers in various...  |  Read More

Steinberg, Michael J.
Michael J. Steinberg

Partner
Shearman & Sterling

Mr. Steinberg practices structured finance, corporate and bank finance law. He represents financial institutions, major...  |  Read More

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